Online Subscription Services

Do These Online Subscriptions Actually Save You Money?

March 23, 2018
Michael Brauer By Michael Brauer
Digital Marketing Specialist

Today's massive influx of online subscription services has made it easier than ever to get carried away with one simple click. What at first might've seemed like a money saving activity, often turns into a budget sucker — without you even knowing it.

While subscription scenarios differ from person to person, separating value from cost is important. That’s why at Northwestern Bank, we've done our research and compiled a list of popular subscription services* — from clothing to food to entertainment (and coffee, of course).  So, which online subscriptions will break the bank and which ones could be saving you money? You decide:

Clothing and Retail Subscriptions

Clothing subscription services started popping up to help people find new clothes, minus the hassle waiting in line at the department store. Two of the most popular clothing subscription businesses are Trunk Club and Stitch Fix. These convenient shopping services keep you out of the store, but are their services and prices paying off for you in the end?

 

 

Trunk Club

Stitch Fix


Stitch Fix

Shopping

Shopping

Estimated Cost*  $225/mo.  $185/mo.  $125/mo.
 Best Money Saver? Shopping. Looking at the numbers, it's clear that buying your own clothes is the more affordable option. By choosing to shop within your budget, you can save an estimated $500 dollars a year (not to mention the monthly fees).

Our Rationale

Trunk Club

Estimated Cost - $225/month, $2,700/year

A $25 fee every month ($300 per year) is part of the Trunk Club package whether you choose to buy something or not. A $25-$300 price tag for casual wear items and business clothes starting at $200 gives the service a high price point. If you bought one or two items per month, plus the $25 fee, you could expect a $200 monthly expense.

Stitch Fix

Estimated Cost - $185/month, $2,220/year

Stitch Fix is more affordable, with a $20 fee every month ($240 per year) and an average clothing item cost of $55 per item. A box has five items, so each shipment has around $275 worth of various pieces of clothing. If you were to purchase three items per month, plus the $20 fee, you would expect a $185 monthly fee.

The Alternative: Shopping

Estimated Cost - $125/month, $1,500/year

Last year, the median household income in the United States was $59,039. Most financial professionals recommend allocating 5% of your overall budget to clothing. With this median income in mind, about $3,000 should be spent on clothes in a year per household.

The number of people in your household will determine how far that 5% needs to stretch. If you’re single or have two people in your household, halving the median income to $29,519 with a $1,500 budget for clothing works as a starting place. This budget puts a clothing allowance at $125 per month.

Conclusion: Boxes vs. Shopping

ShoppingIf you really like the idea of services like Trunk Club or Stitch Fix, give them a try and see if they’re right for you. Do the math and see what 5% of your budget is — a clothing subscription service might fall in that window. Beware the power of the impulse, if the clothes are conveniently in your possession it will be harder to say no!

Entertainment Subscriptions

Online video streaming is almost synonymous with subscription services. Maybe the most famous of subscription services is Netflix, which launched its subscription model in 1999 and pioneered the way for streaming services. Today, there are loads of options for streaming services but how do they compare to traditional cable packages?

 

HBO 

HBO

Netflix


Netflix

Sling TV

Sling

Hulu


Hulu

YouTube TV

YouTube TV

Cable or Dish
Cable/Dish

Estimated Cost*  $15/mo.  $10.99/mo.  $20/mo. $7.99/mo.  $40/mo.  $40-100/mo. 
 Best Money Saver? Draw. When it comes to your entertainment, there is no clear budget-friendly winner. It’s easy to accumulate multiple subscriptions and lose money as compared to a single TV service. It’s also just as easy to keep them limited and save.  Plus, keep in mind that you'll need to pay for Internet to stream (and Internet is often times packaged with your cable or dish provider).

Our Rationale

Streaming Service Subscriptions

HBO Now Cost - $15/month
Netflix Cost - $10.99/month
Sling Cost - $20/month
Hulu Cost - $7.99/month
Youtube TV Cost - $40/month

Each streaming service has its own unique niche and price. HBO provides high-quality original content, Hulu offers TV shows minutes after debut and Youtube TV acts almost as a live TV package.

The biggest case for choosing streaming options comes with the ability to mix-and-match what you want, plus the added value of various movies to watch commercial free. Pairing up two services (or maybe even three) can save you money.

The Alternative: Cable Service Provider

Cost - $40+/month

Cable/Dish providers start at $40 per month with added channels and various DVR packages included at incremental price increases. A TV service will offer the highest number of channels, plus all of the benefits streamers can’t get without additional packages (like Sunday football and prime-time TV shows).

Conclusion: Streaming Services or TV Cable Service?

Draw. It comes down to your preferences, what you want for your entertainment and if your internet can keep up.

Food and Meal-kit Subscriptions

HelloFresh and Blue Apron changed the subscription service industry with their meal-kit services delivered right to your door. Ingredients are individually packaged, and step-by-step directions make it easy for anyone to prepare home-cooked meals. Both companies bill themselves as a healthy and convenient option to stay at home, but are the costs really worth it?

   Hello Fresh

Hello Fresh

 Blue Apron
Blue Apron

Eating Out 

Eating Out

Groceries

Groceries

Estimated Cost (2 people)*  $9.99/meal  $10.99/meal  $12.75/meal  $4/meal
 Best Money Saver?  Groceries (in most cases). It's hard to beat good, old-fashioned grocery shopping. Still, enticing offers like “60% Off” or “First Week Free” make it easy to try out these subscription box services and see whether they work for you — and they'll still save you money if you're someone who frequently eats out.

Our Rationale

HelloFresh

Cost - $59.94 for 3 servings, 2 people (one week)

With HelloFresh’s price point, you can break down the cost per meal to $9.99.

Blue Apron

Cost - $65.94 for 3 servings, 2 people (one week)

Blue Apron’s cost comes in a little higher than HelloFresh with a $10.99 price tag per meal.

The Alternatives: Eating Out or Buying Your Own Groceries

Estimated Cost - $12.75/meal or $4/meal

When you start to break down the costs, the average cost of a meal outside the home is $12.75 and the average meal at home is about $4. So if you frequently eat at restaurants, these services may be a great option to rein in your spending. If you’re the type who makes everything at home, you may end up breaking your budget by switching.

Here’s a benefit you may not have considered: these meal subscription services only send you the ingredients you will use. Meaning, you won’t have a cupboard full of gently used spices or a bottle of Worcestershire sauce you’ll never use again because it only works for that one recipe. Simply put, you’ll waste less food. Not a monetary motivator, but important to keep in mind.

The downside? No leftovers! It’s widely known that lasagna tastes better the next day when you eat it for lunch. The cost savings associated with cooking more than one meal at once is tremendous.

Conclusion: meal-kit services vs. Grocery Shopping

Grocery Shopping (in most cases). Subscription box services can entice you with intriguing offers, and there's nothing wrong with trying them out — but in the long run, they'll fall short of beating a home-cooked meal when it comes to price.

Beauty Subscriptions

Whether you’re a makeup aficionado or just someone who likes to grab a few extra things at the store, the appeal of beauty subscription boxes can be hard to ignore. For a set amount of money, new products are delivered to your door, giving you the excitement of new makeup products for a fraction of what they would normally cost — but is this worth it?

 

 

Birchbox

Birchbox

 Ipsy


Ipsy


Shopping

Shopping

Estimated Cost* $10/mo.  $10/mo.  $25/mo.
 Best Money Saver? Shop For Yourself. While it may be fun to sign up for a service like Birchbox or Ipsy, the most budget-friendly option is still shopping for yourself. Though beauty subscriptions are technically cheaper, they're mostly comprised of samples — and will end up serving as more of an "add-on" to your beauty products than a staple.

Our Rationale

Birchbox

Cost - $10/month

For $10, Birchbox will send you a variety of five product samples every month. From makeup, to masks, to limited-time offerings, Birchbox samples cover virtually the entire beauty spectrum.

Ipsy

>

Cost - $10/month

Ipsy operates on a similar model. Five sample products are sent to your door with the same variety you may see from Birchbox.

The Alternative: Makeup Shopping

Estimated Cost - $25/month

Alternatively, you may choose to shop at your local mall or companies like Sephora or Ulta. While you have the choice of purchasing only what you want at these stores, as opposed to the pre-picked boxes from subscriptions, they can tend to get a little pricey. Places like Sephora also offer three free samples with every purchase (just ask), so there’s the same possibility of trying out different things without any subscription box.

Conclusion: Birchbox vs. Makeup Shopping

Shop For Yourself. When it comes to your makeup repertoire, you need more than just samples. Try out these subscription services as an "add-on" to your beauty products, rather than relying on them for your total supply.

Coffee Subscriptions

Coffee may be more than just a drink for you. For some, it’s a way of life and the preparation behind your favorite cup of joe is just as important as the beans that go into it. So, is a Bean Box subscription worth the money?

 

 

Bean Box

Bean Box

Coffee Shops 


Coffee Shops

Estimated Cost*  $23/mo.  $45/mo.
 Best Money Saver? Bean Box. For those that value the quality of their coffee, choosing a subscription service may save you money and help you discover roasts you would have never found at the nearby chain.

Our Rationale

Bean Box

Cost - $23/month

For $23 a month, Bean Box offers one, 12-ounce bag of artisanal coffee or four, 1.7-ounce bags of coffee. While not made to undercut cheaper coffee options you can grab at the grocery store, Bean Box is trying to offer artisanal coffees as a way for you to discover new flavors and beans you may enjoy.

The Alternative: Starbucks

Cost - $2.25/coffee, $45/month

If you’re always on the go, Starbucks is a name that’s associated with high-quality, consistently good coffee. Though the convenience of the drive-thru and mobile ordering comes with a price. When you start to add up all of the $2 coffees and $4 lattes, a place like Starbucks starts to cost a lot. Our estimates put anyone buying coffee at least 20 times a month at around $45.

Conclusion: Bean Box vs. Coffee Shops

Bean Box. While one Bean Box order may not make you 20 cups of coffee, even two orders from the service will still put you around the same amount of money as going to Starbucks 20 times a month. Don't care about the quality of your coffee? Go with neither — settle for workplace Joe and save yourself even more money each month!

Music Subscriptions

Whether you’re a casual listener or serious audiophile, you have probably heard, or are a part of, one of the various music subscription services available. These subscriptions have taken storm, gathering millions of users across the globe with their ease of access and library of songs, but at the end of the day, are they worth it?

   Spotify

Spotify

 Apple Music

Apple Music

Pandora 


Pandora

Own Your Own Music

Own Your Own Music

Estimated Cost* $9.99/mo.   $9.99/mo.  $4.99 - 9.99/mo. varies
 Best Money Saver? Streaming. Americans spend more than 32 hours, on average, listening to music in a week — that’s 5.5 hours a day. When you take the cost of a monthly music subscription and divide by the average time spent listening, it only costs about $0.08 for every hour of music you consume. That’s a bargain.

Our Rationale

Music Subscriptions

Spotify Cost - $9.99/month
Apple Music Cost - $9.99/month
Pandora Cost - $4.99/month or $9.99/month

Each music service is similar, offering unlimited plays, playlist creation and offline functionality for $9.99 per month. Pandora even offers a light option for $4.99 per month that acts as an ad-free radio. These services give you the world of music at your fingertips, offering you almost any and every song in the world for a small amount of money.

The Alternative: Owning Your Music

MP3 Cost - $1.29
CD Cost - $10/$15
Vinyl Cost - $20

Purchasing music gives you the pride in owning a physical item, but it comes at a cost. A single MP3 costs $1.29 today — just purchasing eight songs exceeds the $9.99 threshold streaming services offer.

Conclusion: Streaming vs. Owning

Streaming. The variety of music available and mobility of the service make subscriptions a clear budget-friendly winner. Though if you’re the type of person who enjoys owning their music, like those participating in the vinyl resurgence, music subscription services may be an added expense to your bottom line.

Do Subscriptions Save You Money?

With so many options and subscription services available, it all comes down to what you value and where you find your value. If you’re a makeup lover, the extra $10/month might be completely worth the spend - just be sure to think of it as an extra expense, not a necessity. If you’re still purchasing complete albums but only listening to two songs, it’s time to buy a music subscription (your bank account will thank you). 

Most importantly, review your account and check the value you’re getting out of any subscriptions — sometimes they’re not worth it. Luckily, we make it easy to organize and pay your monthly bills from one place — the NWB Mobile App!

Also, for more information and monthly tips on ways to save money, be sure to subscribe to the NWB newsletter.

*NOTE: The information and tables on this page are for informational purposes only, and should not be considered financial advice. All estimated costs on this page are based on manual online research performed by Northwestern Bank, but cannot be guaranteed. Many prices for subscription services vary, depending on special offers, product changes or other business factors that might influence actual costs. You should always evaluate your unique financial circumstances before making any subscription decisions. If you need help, or have any questions, contact Northwestern Bank at (712) 737-4911 or (712) 324-5141 or visit your local branch.